A year ago during Canadian Wheat Board day at Saskatoon’s Crop Production Week, 250 farmers listened attentively as the board described its new barley marketing program, CashPlus.
The atmosphere was serious and business-like as farmers grilled board officials about how the program would work.
But CashPlus would have a rough ride over the next few months as it became caught up in the contentious political debate over barley marketing.
Maltsters, grain companies and the federal government dismissed it as a desperate attempt by the board to retain its export monopoly on malting barley, and the program’s future seemed uncertain.
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But many farmers liked the CashPlus contracts and despite the hostile reception from industry and government, the board never abandoned it.
Last week, the board’s chief executive officer, Ian White, told farmers attending this year’s CWB day that CashPlus has survived and become a widely used marketing vehicle for malting barley.
“I think we’re now at the stage where it is much more widely accepted and people are getting used to it on both the farmer side and the customer side,” he said after speaking to the meeting, adding that all malting companies are now using CashPlus.
About 370,000 tonnes of malting barley have been marketed through CashPlus for 2008-09, representing about 15 percent of the projected 2.5 million tonne malting barley program.
White expects that percentage will grow.
“It is gaining acceptance and we’ll probably eventually see the pool and CashPlus being roughly equal,” he said.
Based on typical annual malting barley sales to the export and domestic markets of around two million tonnes, that would mean CashPlus volumes of around one million tonnes.
White said the traditional pooling system is still a “very good” marketing system and will remain the preferred choice for many producers.
“We will use CashPlus in conjunction with the pool to provide farmers with the best marketing plan we can,” he said.
CashPlus contracts provide a guaranteed minimum cash price, reflecting around 93 percent of the price at which the board is selling to domestic and international buyers.
Farmers and selectors are free to negotiate premiums and discounts, and any revenue above the contracted price is returned to contract holders at the end of the marketing year.
Maltsters and grain companies say they are using CashPlus somewhat grudgingly and continue to have criticisms.
The major complaint is that the contract doesn’t provide 100 percent of the market value of the barley up front.
Wade Sobkowich, executive director of the Western Grain Elevator Association, said the program doesn’t provide full market and price transparency.
“We don’t think there is a rationale for paying farmers less than the actual sales value less administration costs,” he said.
White said the board’s goal is to pay out 95 percent of the actual sales value up front.
“I don’t think 100 percent is possible given all the things we have to do to operate the program,” he said.
“We have to keep some money back because there are known and unknown costs, and we do intend to make further payment later in the year.”
Officials from the WGEA and the board were scheduled to meet this week to see if their differences can be ironed out.
